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Learn about rebates, loans and subsidies for energy saving upgrades to your home at the non-profit website http://www.dsireusa.org/ .    

The Database of State and Federal Incentives for energy efficiency is comprehensive, well organized and a great resource for the “ever changing” programs available to taxpayers.   It features easy links for federal, state, local rebates and loan programs for a variety of home improvements from adding insulation to replacing an old water heater.

Readers would be wise to check with the DSIREUSA website before making decisions about home improvements or home building.    Also, if you have made home improvements during 2007, verify with your accountant that all deductions and credits for qualified improvements have been included on your tax return before April 15th.

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   With many major home builders clearly struggling, why aren’t new home prices falling as fast as we see in the pre-owned home sector?  The answer is they are, but the discounts come in the form of incentives to purchase, rather than price cuts.

Home builders are relucant to slash prices in their own developments with good reason.   Dropping prices creates panic among homeowners who have already purchased and encourages buyers, who are still under contract, to walk their deals and run for the hills.

For example, publically traded Lennar homes disclosed that their base sale price has remained stable, but their average incentive to new buyers is approximately $50,000 per home.  This slight-of-hand discount allows Lennar, like other builders, to discreetly reduce their prices, instead of obviously reducing their prices.

Home builders choose to give away free appliances, vacations, cars, special financing or free swimming pools in order to keep peace in the neighborhood, while maintaining higher prices for the community and future build jobs.   So, why does this appealing alternative only work for builders and new homes??

Incentives work for builders because they are in control of the inventory in a new home development.   Individual sellers in existing neighborhoods have a difficult time “sweetening the pot”, as an option to slashing their asking price, because unlike the builders, they can not control what price their neighbor will sell for.

When making an offer for a new home, don’t expect your builder to accept an offer $50,000 less than the sales price, but do take them up on their offer for a new BMW.

Low Flush.  Dual Flush.  Power flush. Gravity Flush.   And, just when you thought plumbing could evolve no further… witness the Creative Flush.

      I often refer to “painting” as the ideal home improvement.   Considering the nominal cost and ease of application, nothing compares with a simple coat of fresh paint and its ability to update and freshen our homes.   The downside of painting was the overwhelming smell that remained afterwards.

Now, thanks to new, innovative products, paint is stink-free and a better value than ever before.   You can increase the value of your home, improve the environment and your health, by repainting with Zero VOC paints.  

VOC is the acronym for Volatile Organic Compounds.  Simplified, VOC is noxious odor we smell after applying fresh paint.    VOC ratings for paint measure the amount of materials that come out of our paint as it dries.  The EPA has determined that architectural coatings account for 9% of all the offgassing that damages our ozone layer and environment, which is reason enough to choose Zero VOC paints.

Thankfully, we have a number of new choices in innovative paint products.  My personal favorite is  www.greenplanetpaints.com , which I believe to be an ideal role model for this country and the paint industry.   

Their beautiful paints are made from sustainable, natural  materials such as clay, mineral pigments, soy extracts, etc., which bring VOC’s emissions to Zero.   In addition to lessening environmental impact, Green Planet Paints is pro-America, purchases all materials locally and hires the disabled to make their paints.      

Tip:  When selecting a Low or No VOC paint, keep in mind that the government only rates the paint base for VOC.  The colorant that is added to the base is not yet calculated into the VOC total.  This means until the rating system changes, you should look deeper than the overall, advertised rating to ensure your paint is not emitting VOC into your home.

If you are selling your home, tell home shoppers that your home is painted with Zero or Low VOC paint.   Today’s buyers are placing a higher value on healthy and environmentally friendly homes.  If smart sellers pay attention to their needs, the market will reward the effort.

    Home sales and prices continued to drop in the Bay Area, with the median sale price hitting below $550,000.

A total of 3,989 new and resale houses and condos sold in the nine-county Bay Area in February, down 36.7 percent from 6,305 for February 2007, DataQuick Information Systems reported.

January and February are typically the two slowest months in DataQuick’s statistics, which go back to 1988.

“Sure there are price declines out there, especially in inland markets. But it’s not realistic to think many sellers are going to drop a $600,000 or $700,000 asking price down to $550,000 just so a buyer can finance with a conforming loan. We can only conclude that a lot of activity is just on hold, hence the spectacularly low sales counts,” said Marshall Prentice, DataQuick president.

In Alameda County, sales dropped 44.5 percent to only 753 sales and the median home price dropped almost $100,000 to $486,500. Contra Costa reported a 35.1 drop in sales and a new median sales price of $450,000. San Mateo also dropped 35 percent in home sales and its median dropped to $646,500 from $720,000 in February 2007.

Solano County also had a 39.3 drop in sales and the median sales price dropped $95,000 to $350,000 from last year.

The median price paid for a Bay Area home was $548,000 last month, down 0.4 percent from $550,000 in January, and down 11.6 percent from $620,000 in February 2007

     Southern California home prices continued to fall at a record pace in February, and are now at 2004 levels, a real estate information service reported today.

The median price for a Southland home last month was $408,000, down 17.6% from a year ago, according to DataQuick Information Systems. Area home prices have now fallen 19% on average from their peaks last year.

The steep price declines are putting many more homeowners “upside down” — owing more on their homes than their homes are worth. Forecasters say foreclosures will likely continue to rise and prices will fall further.

About one-third of Southern California homes sold in February had been foreclosed since January 2007, according to DataQuick. A year earlier, previously foreclosed homes accounted for 3.5% of sales.

BREAKING SOUTHERN CALIFORNIA HOUSING NEWS

Since September, each month’s sales totals have been the lowest for comparable months since 1988, DataQuick said.

The rapid pace of the decline has led Los Angeles economist Christopher Thornberg, who last year predicted a 20% decline in Southern California home prices, to revise his projection. He now thinks prices will fall 40%.

In the last real estate bust, Southern California home prices dropped 19% between 1991 and 1997, according to DataQuick.

The median down payment on homes purchased last year was 9%, according to the National Assn. of Realtors. With median prices down by more than that percentage in Southern California, it is likely that the typical homeowner who bought last year is now upside down. Last week, the Federal Reserve reported homeowners now own less than half the equity in their houses, the lowest level since 1945.

UCLA Anderson Forecast Director Edward E. Leamer also believes home prices are still declining. He had predicted a 20% to 25% decline from the peak.

Leamer thinks his prediction is still on target, and that other indices show a slightly smaller price decline so far. The Case-Schiller Index, for example, shows Los Angeles and Orange County home prices to be 15% below their peak. That index, Leamer said, shows the market is still correcting itself.
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 Innovative Approach to High Rise Condo’s

    Is refinancing your Adjustable Rate Mortgage the right choice?    Read the truth about ARM’s, to determine if holding onto your old loan is the right thing to do.

Definitions: 

• Adjustable Rate Mortgage:  A mortgage with an interest rate that may change, usually in response to changes in the Treasury Bill Rate or the Prime Rate.  The purpose of the interest rate adjustment is to bring the interest rate on the mortgage in line with market rates. The borrower is protected by a maximum interest rate (called a “ceiling” or “cap”), which may reset annually.   ARMs usually start with better rates than fixed rate mortgages, in order to compensate the borrower for the additional risk that future interest rate fluctuations will create.
• ARM:  Acronym for Adjustable Rate Mortgage.
• Index:  An Index fluctuates with the economy and serves as an indicator or guide point for current interest rates.   Lenders use a published Index, which varies, to adjust interest rates as the economic conditions change.   Common Indexes for ARMS might be the One-year Treasury Security or the Prime Lending Rate.   The actual Index for any US Security can be found in the financial section of your newspaper, your bank or from a source such as the Wall Street Journal.
• Margin:  A Margin is defined as the number of percentage points the lender adds to the Index to calculate the ARM interest rate at each adjustment period.  The Margin will be locked in at closing and remains fixed during the life of the loan term.  The Margin is not impacted by upswings or downswings in the economy.
• Rate Caps:   Rate Caps are a safe guard, which limit how much loan interest rates can increase over a specific period.  Caps are set by the lender at closing and do not change with the economy.
• Rate Ceiling:  The Rate Ceiling is the top or maximum interest rate the lender can charge, regardless of the economy.  The ceiling is set by the lender at closing.   

4 Ways to determine if Refinancing is in your Best Interest   

1. Learn how the new interest rate for your Adjustable Rate Mortgage will be determined.   Lenders use a published “Index”, as a reference point, then they add a fixed number of percentage points, called a “Margin” to the Index, in order to establish the new interest rate you will pay. 

      For example:  If your Loan specifies the “90 Day T-bill Note” as the Index,  with a  2% Margin, the calculation is:    

                       The 90 Day T-Bill note (Index) at 2.160%                                  PLUS, a 2% Margin                         EQUALS a new interest rate of 4.160%.   

2. Check with lenders to determine what the current interest rates would be for a new, Fixed Rate or ARM.   
3.  Ask your lender for a truth in lending statement that discloses the amount of money you will pay at closing for the new loan.
4. Do the Math.   Divide the loan closing costs by the amount of money you save per month on the new mortgage versus the old one.   The number shown will determine your break even, or the number of months you will need to stay in the property to recoup the closing costs. 

         Example:    If a new loan reduces monthly payments by                             $250 per month and closing costs were $7000,

                            you would need to stay in your home for 

                           28 months to break even.  If you don’t plan to stay

                           that long, refinancing will cost you money. 

5. Keep in mind that if you refinance, you lose the number of years you paid into the Existing Loan.   For example, if you have paid your original 30 year loan for 5 years, the loan would be paid off in 25 years.  If you refinance, the loan starts over at year one, which means 30 years until you are debt free.

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       If you are one of the millions of homeowners who have an Adjustable Rate Mortgage (ARM), be wary of offers of assistance from lenders.  Through a recent experience, I discovered why we should educate ourselves about the terms of our existing loans, before talking with our lenders.

I received a letter this week from Citibank, my lender, entitled “Mortgage Volatility = Mortgage Tranquility”.  The letter, set in threatening bold type, warned that my Adjustable Rate Mortgage was about to RESET.   Triggering fears that my decision to finance with an ARM would come back to haunt me, I interpreted this “call to action” as a sign that my lender was looking out for both of us.  Only after I experienced the “personalized service from the people I know”, did I discover how gullible they still believe we are.

Upon reaching a Citibank agent, I was warned that my mortgage interest rate would jump from 4.375% to 6.75% on June 1^st, 2008.  The agent immediately offered to help me avoid the foreboding event with an offer to refinance my loan at only 6.25%.   My first reaction was “whew, am I lucky”, but then I wondered…”How does this young lady know what interest rates will be in June???”   “Haven’t we heard talk of another interest rate cut on the 18^th of March, for example???” 

Smelling a rat, I decided to learn the logic behind her advice to get rid of my ARM.  I ask what Index rate and Margin she was referring to, so that we could compare the numbers.  Unbelievably, my agent had no

I decided to push on, determined to learn if anyone at Citibank could tell me what facts they relied upon, before recommending a new loan.   On my third attempt, I reached a lady who knew a little

So, I ask the powers that be…What is going on at Citibank??  Where are the people in charge of policing lending practices on behalf of the consumers???  Have I simply misread the daily headlines reporting that millions of homeowners are losing their houses?  Have I misunderstood this crisis to be due in part to our lenders pushing ill-advised loans in exchange for a quick buck?   In spite of all the mournful rhetoric, it appears that little has changed in terms of stopping this behavior or protecting citizens.

My advice for consumers is to remain highly skeptical, when considering any offer from lenders!!   To protect your future, you must arm yourself with the terminology and facts about your present loan.  Take nothing for granted.  Force your lender to prove the numbers that justify their recommendations.    

FAQ:  No lender can honestly recommend refinancing as an option, without first knowing how the old and new loans compare.   Before you are lured into buying a new loan, spending thousands of dollars in closing costs, know what the future pay off will be versus the cost.  Then and only then, can you make an

Thank you for visiting www.infotube.net .  Please check in with us tomorrow, when we demystify the Adjustable Rate Mortgage Loan.

As always, please send your questions or comments to info@infotube.net